Marketing-Basicconceptsandoverview29082018

INTRODUCTION TO MARKETING

 What is marketing ? Marketing is where the company adopts a marketing orientation, and
not a sales or production orientation. The company asks the consumer what he or she
wants, and then gives it to them. The consumer is placed at the centre of all the company’s
processes. The consumer is king. The company builds a profitable relationship with the
consumer.
 What is the role of marketing in an organisation ? The marketing department represents
the ears of the company. That means that the company must listen to the consumer and the
market. The marketing department will also create products for the consumer. It will also
create messages destined to the consumer. ( So it could also be conceived as being the
mouth of the company !) Marketing will also help « sell » the product by « dressing it up » in
the right way.
 What are the differences between strategic and tactical marketing ? Strategic means long
term. Tactical means short term. Strategic is where the company will create products for
the long term. It will also create products for specific targets, and also strategic markets. This
may take some time – to create and manufacture products for a specific demand. Tactical
marketing is more short term – and more operational. It may often involve dealing direct
with the consumer. It may be placing an advertisement as a reaction to a competitor
advertisement for example.
 What are the 4P s and the Marketing Mix ? The 4P’s are also known as the Marketing Mix.
The four P’s mean – Product, Price, Place, Promotion.
 The Marketing Mix means how do you actually implement the 4 P’s – how do the 4P’s
interact together. The four P’s should be coherent together. The 4P’s ( the marketing mix) –
represents the reality of the product as seen and experienced by the consumer.
 The Product is the most important element – if the product is not good, people will only
buy it once. So Product is a basic description of what the product is – size, function,
appearance etc. Sometimes you will compare it to the competition’s product.
 Price is the second most important element. Often price determines if people buy a product
or not. An expensive product will be seen as being of good quality, an inexpensive product
will not. Often you will compare price with competitors.
 Place means Distribution – or how the product is distributed. The theorist was looking for Ps,
so that why it is called Place. A product may be distributed in a supermarket or on internet.
There is exclusive distribution or volume distribution.
 Promotion. Promotion actually means Communication – but the theorist was looking for P’s
again. Communication means any advertising that is done – for example television or
posters, and what kind of message and visual is used.
 The Marketing Plan. The marketing plan is actually a tool that is at the service of the
Business Plan. Marketing reports to Business. The Marketing Plan is a coherent whole of
different elements that can be used- to reach Business Objectives. Within a Marketing Plan
you may have consumer research, new product design, communication budget, and also
budgets for marketing operations such as exhibitions.
THE CUSTOMER

 B2B – this means Business to Business. It can also mean Corporate Business. One business
sells to another business. It is a very important market.
 B2C – This means Business to Consumer. The consumer market is the largest market in the
world. It is normal consumers buying products produced by companies for them.

Market Research as a tool in understanding market needs

 Companies do lots of consumer research to understand them, and create products that are
relevant. The idea is to understand and anticipate consumer needs.
 Market research is done on a quantitative basis and also on a qualitative basis.
 The more a company can understand consumers, the better.

Customer segmentation

 In the 1950’s , the Great American Public was made up of two adult and two children
families, living in a suburban setting, with one or two cars and a washing machine.
 Since then the market has changed, families have changed, and segmentation has become
much more important. Companies now target their products to very specific groups of
people, perhaps based on age for example – but instead of targetting eveybody, they will
target a population segment of 18-25.
 Segmentation means breaking the population down into groups, and creating a relationship
with them by paying them special attention.
 Data Collection – as you will all be aware, many companies, including social media
companies, collect data on our behaviour. Many people think that these companies collect
too much data. Loyalty cards in particular allow companies to have a view of how we live.
This data is used to help us to use more and more of the company’s products. Big data is an
effort to stock and coordinate all the data that is received by companies. Another way of
looking at it is to call it «  Knowledge management » - how does a company manage all the
knowledge it has about the market, consumers, and competitors.

PRODUCTS AND INNOVATION

 What is a product ? A product is a product or service that fulfills a need for a consumer.
There are products we buy every day without thinking much, or other products where we
may debate for a year or more which is the best product to buy. The product is the basic
item or service that is offered. A TV Channel is a service. A steel pillar is a good. A
restaurant is a product and a service – there is food which is a product, but it is served by a
person – a service.
 What is the concept of a brand ? A brand is a way of giving a personality to a product. It is a
way of differentiating one product from another. Imagine if all the goods in a supermarket
had the same packaging and name – how would you choose. The concept of brand promise
is of interest here – the brand name offers a promise – and if the consumer believes the
promise, he or she buys the product. If the product delivers on the promise, it will be bought
again and again. Hopefully creating a lifetime customer.
  Innovation : new product ideas, screening and testing and evaluation. Of course innovation
should be based on what the consumer wants. Innovation also often works around existing
brands. Within this context, brainstormings may be held to create new product ideas. At first
these ideas may be incredibly crazy – but later they are filtered down and screened. To make
sure that the ide ais realistic and in harmony with the company policy. After this screening,
ideas will also be tested in different ways – does the consumer understand the new product,
or can the consumer open the package easily. Marketing and communication may also be
tested.
 Launching new products – as mentioned previously, it is often a good idea to test market a
product. This is usually done in a specific region that closely resembles the usual
demongraphics of the areas where the product is sold. Pricing, channels, marketing and
communication can all be tested. So can sales promotion. A launch is usually undertaken by
a task force – and it usually involves the coordination of many different departments. All
launches need technical or operational budget for the new product, and also a marketing
and sales budget.
 The product lifecycle. All products have a lifecycle – some lifecycles are short and others are
long. All lifecycles follow the same pattern which is : Introduction, Growth, Maturity,
Decline.
 The marketing approach at each stage of the product lifecycle – marketing management
must adapt its strategy to each different stage of the product lifecycle. For example, the
introduction phase may be characterised by heavy advertising on television. The maturity
phase may be more characterised by the addition of extra services, or aggressive
promotional techniques to win over clients from the competition.
 Pricing and positioning strategies. For new product launches we talk about skimming or
volume pricing. Skimming is a high price that is aimed at recuperating the Research and
Development costs that have been involved in discovering or creating the product. Volume
pricing seeks to give a low price and gain a high percentage of market share. Positioning is
the angle that you use to sell a product. What the product does and who it does it for.

MARKETING CHANNELS

Wholesale

 Wholesale distribution is officially a business-to-business function. Wholesellers can only

oficially sell to retailers. They have low proces and sell in large quantities to retailers.
(However, the arrival of Costco and other cash and carries such as Metro slightly changes
things as consumers who buy an inexpensive membership card have access to substantial
discounts. The opening of the first costco in France was on the 22 June at Villebon-sur-yvette
(91). Membership is only 36 euros per year-open to professionals and consumers.)

Distribution

 There are different types of distribution channels for different types of product. For example,
tobacco products are held in warehouses that are approved by government customs and
excise departments. Some distribution is volume based and some is more selective. The
tendancy is towards big warehouses that act as « hubs » for lots of different countries. There
is a very large warehouse at Chanteloup near Disneyland Paris. Another major factor is
whether the merchandise needs to remain frozen or not.
Implications of price on different channels

 Please see section below on retail. Also remember the 4P’s. The 4P’s should all be coherent.
So distribution channels should be in harmony with the three other P’s. For example, Chanel
which is a sophisticated upmarket product, will not be distributed in Tati stores in Paris
( which are volume stores). The higher the price of the product, the more upmarket the
distribution should be.

Retail

Luxury products might be distributed selectively , in a very controlled environment. For

example Gucci – which only sells products in its own stores. Other brands might accept to be
sold via a more general store such as Sephora. Retail is a very important sector because it is
the « final sell » to the consumer, and as such impacts strongly on the brand image. The
quality of stores is important, but also the number of outlets, and geographical distribution.

Agents and Brokers

 For many years insurance was sold via agents and brokers. This has now become largely
taken over by the banks. In the UK there is also First Direct which was one of the first
companies to sell insurance online. Traditionally, the agent used to have a territory and used
to go and see hic clients every month. The word broker is more associated with the stock
market – a stockbroker is somebody who buys and sells shares for clients. In theory a broker
is a person who acts as a middleman between two parties to do a deal or « broker » a deal.

Direct marketing

 Direct marketing is also known as direct-response marketing, and can be defined as any
marketing action that seeks to elicit a direct response from a consumer. This could be via a
coupon that needs to be sent away, or a direct telephone line placed on an advertisement. A
catalogue is also a very effective form of direct marketing - the most famous in the Unites
States is the Sears catalogue. In the UK there is Great Universal Stores. In France there is Les
Trois Suisses. Direct marketing has a reputation as being one of the most effective forms of
marketing. Direct marketers sell a lot of merchandise, and also track who buys and who
doesn’t buy, and which direct marketing techniques work the best. Advertising specialists
such as David Ogilvy belive that all advertising should be influenced by direct mail techniques
– and also editorial approaches from the press and magazines.

MARKETING COMMUNICATION

 Demand Creation – this could be « push » centered – where marketers send e-mails to
consumers to entice them to buy products. But more generally, marketing exists to create a
demand for specific products – via advertising and other forms of communications. This
demand is usually created for each product for a specific target segment of the population.
Advertising is always present , and repeated advertising keeps the product in « top of mind ».
 Websites – have become an essential tool for marketers. Much product information and
detail can be given on a web site. Marketers can encourage consumers to visit their website
for further information. Consumer activity on websites can also be tracked. One very
positive thing about websites is that they lessen the need to waste paper with brochures.
 Digital Marketing – digital marketing is quite similar to direct marketing because often
consumer behaviour can be measured directly on the marketer’s web site. Marketers are
adapting to digital because the younger generation are very active on social media.
 Youngsters live and buy on the internet. Many social media such as facebook and Instagram
are good for marketing because they have volume coverage, and also can display very
attractive photographs of the product. Marketers are now selling directly on social media,
and creating a following around social media influencers or « bloggers ».
 Events, Expos and Trade Fairs. These three marketing tools can be used for business to
business, and often are. They can be very effective ways of talking to a small but important
number of professionals. Many companies include them in the marketing plan. They can
also be used to approach consumers. Many marketers consider these tools to be operational
marketing tools – as they are at the end of the process, and are in direct contact with the
consumer. They also show the face of the brand – and its nice to offer champagne to clients.
 Advertising is seen as the elder statesman or big brother of all communication tools.
Advertising uses mass media to get messages across to target populations quickly and
efficiently. Messages are perfected by sophisticated advertising agencies, and then powerful
media are used for maximum impact and repetition. Imagine the effect of advertising over
many years. Advertising puts brands on consumers « shopping lists » and also creates « top
of mind » awareness as mentioned. Advertising helps differentiate one brand from another
– either rationally or emotionally.
 Different cultures in marketing communications – as existing markets become crowded with
lots of brands, marketers have sought to take their brands onto an international plane. So
many marketers have sought to adapt their products and brands to the countries concerned.
For instance, in India people do not eat beef – so fast food companies sell chicken instead.
Companies will look at the market and also do consumer research to find out what
consumers want in each market. They may often adapt their products to a market.
However, American products and brands are also making an impact on the world – for
example – people all over the world go to McDonalds, and young people around the world
use Apple computers and devices.

CORPORATE COMMUNICATIONS

 Corporate Communications versus marketing communications. Some people say that any
communication about a company should be defined as corporate communications. Aside
from that Corporate Communications is usually defined as any message that is sent out
about the Company – its people and its projects. Marketing communications is more about
products and brands.
 Reinforcing the company brand. A company can also work with an umbrella brand or a
« masterbrand ». This is communication that talks about what the company is doing as a
whole. It is a big corporate brand that is above all the other products and brands.
 PR – PR usually means press relations – creating an image for the company via relationships
with the press. This is a well-established way of generating positive coverage. PR can also
means Public Relations, which means creating goodwill with decision-makers that are
imortant for the brand.
 Investor Relations – many large companies have an investor relations department. This
department exists to create and maintain good relationships with shareholders. Shareholders
are people who have invested money in the company. Nowadays shareholders are very
important and are constantly looking for a high return on their investment. Shareholders
may be invited to priveledged events or get discounts on company merchandise.
 Crisis management – an important part of marketing management is to manage the image of
a company. This can often be easy – until there is a crisis. Management should prepare
beforehand to be ready to react to a crisis. There may be a dedicated crisis room, and also a
 dedicated crisis team. Often , many departments of a company can be represented in a crisis
unit – and thus rapid decisions can be made in critical crisis situations. The press relations
department is often involved, and the usual procedure is to have only one point of contact
for a crisis. The press department should be transparent about what happened, and show
how the company is trying to put things right. Social media can generate crises for
companies – because it gives a lot of power to the consumer.
 Community Relations one important term at present is Corporate Social Responsibility.
Businesses should try and help the community near where they have their place of business.
This is a way of giving back. For example, a company may wish to build a school or a hospital
in an area near where it is working. Companies may also have a volunteer scheme, and help
local youth, or underpriveledged populations or other similar projects.
 Lobbying – lobbying basically means putting the company’s point of view across to
government organisations. In many major cities such as Washington, New York, London,
Paris, Brussels and Strasbourg there are thousands of lobbyists that represent their
companies to government organisations. There is a constant pressure on government and
regulators. Many opponents of the big companies say that the system is corrupt. A major
example is the tobacco companies lobbyists, and also the National Rifle Association. The
opinions of regulators and legislators are very important, because they make the laws.